IS AGRICULTURE BECOMING fashionable? For, with politicians and policymakers the recurring theme seems to be `farm'. At the National Development Council meeting, the Prime Minister, Dr Manmohan Singh, attributed the economy's inability to achieve the targeted 8 per cent annual GDP growth rate in the Tenth Plan period to the disturbing trends in farm growth. In the first place, no one really believed the country would register that ambitious growth, especially after averaging a modest 5.4 per cent in the Ninth Plan, when agriculture grew at measly 2.2 per cent. Widespread drought in 2002-03 the first year of the Tenth Plan dashed hopes of a positive contribution from agriculture output fell 7 per cent pulling down the GDP growth rate to 4.4 per cent.

It is well known that economic growth is tied to farm sector performance. High GDP growth has invariably been accompanied by, and often the result of, healthy farm output numbers. The fortunes of Rural India are tied to agricultural growth, as nearly 60 per cent of the population earns its livelihood from farm and related activities. It bears repetition that agriculture is the largest private sector enterprise that ensures growth with equity. Despite knowing well the various internal and external challenges to the farm sector, successive governments, instead of designing and implementing growth-oriented policies, merely paid lip service to it. The depressing condition on the farm front is the result of years of neglect.

A new strategy for the agricultural sector is the need of the hour. But this cannot succeed without an honest assessment of the financial, technological and human resource required, or the political will to implement it. We face the anomalous situation of a rising food subsidy burden and a falling public investment in agriculture. This has to be reversed. Though the farm sector challenges are as varied as rainfed cultivation, fragmented landholding, low level of input usage, antiquated agronomic practices, poor marketing infrastructure and tardy flow of market information to primary producers, two issues need special attention water management and credit delivery. The available water resources have to be better harnessed and managed scientifically in order to reduce the country's dependence on monsoon.

The Accelerated Irrigation Benefits Programme and the Fast Track Programme under the AIBP have to be speeded up, and last-mile projects completed quickly. Levy of user-charges would help arrest wastage of water. Though the overall flow of institutional credit for agriculture has increased in recent years, there are gaps still such as inadequate provision of credit for small and marginal farmers, low medium- and long-term lending, limited deposit mobilisation and heavy dependence on borrowed funds by major agricultural credit purveyors. These have to be rectified. However, more important is capacity-building among farmers to repay loans. Little has been done in this direction. Investment in building warehouses for storage as well as primary grading and sorting, and dissemination of market information can be a potent combination that would improve the marketability of the produce and help transform simple farmers into savvy traders.

(This article was published in the Business Line print edition dated June 30, 2005)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.